Journal of Business and Retail Management Research (JBRMR) Vol. 10 Issue 3 July 2016 Local industrial development in Algeria Herizi Ratiba Belkacem Djamila ENSSEA, Algeria Key words Industry, industrial strategy, regional development, clusters, Abstract In Algeria, regional development was first realized, in the framework of a planned economy in the 1970s, by local development programs or plans f or local equipment focused on creating jobs, industry promotion, and development of rural and Saharan regions but without any decision - making autonomy granted to local authorities. The industry, which is the object of our study, then benefited from economi c programs of the local industry (PIL). These were to be the basis for creating a second decentralized state industrial sector. The aim of the PIL was to offset the negative effects of state industrialization process in order to use local resources, ensure the satisfaction of local needs and to decentralize land use policy. Thus, the industrial areas have been created: nearly 500 business zones and 70 industrial zones spread over a total area of 22,000 hectares. These were, however, spaces of corporate storage. Following the liberalization of the economy since the 1990s, the lack of competitiveness of industrial enterprises has become a major problem, and then an industrial strategy has been dev eloped since 2007. One of the principal objectives of this latter was to create integrated industrial development zones (ZIDI) or clusters. According to the national planning strategy, these ZIDI will be created in areas where there are concentration of bu sinesses, infrastructure availability, proximity to university, research institutions and quality of services. We propose in this study to locate the geographical concentration and specialization of economic activities and especially industry after analysi ng the Algerian local development dynamics. Introduction Local industrial development in Algeria can be divided into two major periods since 1970. The first one was characterized by an administered economy which involved the 1970s and 1980s. During these decades a sectoral approach of the development prevailed at the expense of local development. Then a second period began from the 1990s and lasts until the present days following the liberalization of the economy and therefore the decline in state interve ntion. Thus the State had to be more concerned with local development in particular to coordinate the private investment. But, have we changed local development dynamics? There are at least three forms of local development (Charif.M - 2010): endogenous deve lopment (Garofoli.G - 1992), the dynamics of public authorities (H.Shmitz - 1990) and finally the exogenous dynamics. The first is based on a strong interaction between the political and the social levels, strong relations between actors in the locality, and a high degree of autonomy. The dynamics of government presupposes a centralized local development with state coordination and control. Exogenous dynamics is through the attraction of FDI (Foreign Direct Investment). What kind of local development dynamics is developed in Algeria? 1. Evolution of industrial local development in Algeria Local development in Algeria has long been marginalized in favor of a sectoral development carried out as part of an administered economy. At independence in 1962, Algeria inher ited through the GPRA (Provisional Government of the Algerian Republic), the General Directorate for planning and economic Studies, which was attached in 1963 to the Presidency. This management was the precursor of the Algerian economic planning organizati on. In 1965, www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 24 Journal of Business and Retail Management Research (JBRMR) Vol. 10 Issue 3 July 2016 this structure was integrated into the Ministry of Finance and Planning. It was only until the launch of the first four - year plan (1970 - 1973) that functional structures of a State Secretariat for planning (SEP) were implemented. The SEP was ho wever suffering from the inferiority of its legal status. Indeed, the weight of its arbitrage resulted from its power of persuasion with respect to sector leaders and the direct intervention of the head of the State (A. Benachenhou - 1980). Regionally, ther e was the creation of the Economic Planning Animation Services (SAPEC) in 1971 to address the lack of local capacity for study. SAPEC also suffered from the inferiority of their legal status because they do not participate to the executive of the “Wilaya” (this is the most important local structure hierarchically), institution to which they belonged. It took until 1979 for them to be raised to the status of DPAT (Departments of Planning and Territorial Development) which sit on the executive of the “Wilaya” . These structures had to manage local programs. In 1966 was implemented the first regional program called” the special program of Ouargla”. The first regional development programs were known as "special programs of development." From 1970 to 1973 (first f our - year plan) special programs were complemented by the local equipment plan (PEL). In 1970, 05 types (PEL) were implemented to consolidate all the actions of local equipment. The first type: (EP) plans for full employment to create permanent and temporar y jobs assigned to agricultural work or infrastructure. 2nd kind: (DIL) plans for the development of local industry, they cover the following sectors: crafts, tourism, and hydrotherapy. 3rd kind: (DCF) plans for the development of community facilities. It is about creating community facilities to improve the living conditions of the population, conducting sanitation works. 4th kind: (DER) plans for rural development and agricultural production projects in the traditional sector 5th type: (RECLS) plans for renovations and equipment of the Saharan local communities. The PEL experienced the same limits as the “special programs” that preceded them. - They were not based on a national planning policy. - The design of the PEL experienced shortfalls because of the ins ufficiency of the technical competence of local authorities. In an attempt to overcome these limitations the SAPEC were created but these services are not effective as they do not attend meetings of the executive of the “Wilaya” as mentioned above. During the second four - year (1974 to 1977) there have been attempts to remedy these 02 boundaries by introducing (PCD) municipal development plans completed by the (PIL) local industry plan. During the second four - year plan, the “Walis” (they are in charge of th e “wilayas” and, regionally, they represent the most important responsible hierarchically) that once were acting simply by delegation of the line Ministry (Interior Ministry) became authorizing officers of the local budget. The “Walis” and the central admi nistration are the true holders of power decision about the implementation of investment projects. However, “local authorities, “Wilayas” and “communes” (or districts, these are the structures at the lowest regional level) are assisted entities as the fund ing of their equipment is 90% state» (A - Bouzidi 1988 - p 63). Industrial zones (ZI) were developed to accommodate industrial investments which were essentially state. They defy logic of decentralization or regionalization. At the end of the second four - yea r plan 73 ZI were built on an area of 15 000 hectares with no land use plan. The majority of industrial areas was conducted between 1966 and 1977. An industrial zone was to be www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 25 Journal of Business and Retail Management Research (JBRMR) Vol. 10 Issue 3 July 2016 composed of at least five industrial enterprises and provide at least 1,000 jobs in an area of 50 - 2000 hectares. Regarding the communal development plans (PCD), they can be classified into 03 categories: 1. Communal plans of agrarian revolution in the second four - year plan (agrarian revolution consisted in giving lands to the landless peasant) involved 580 communes. 2. S emi urban PC: involved 70 predominantly urban towns 3. The P.M.U: Urban Modernization Plan, applicable to urban areas for the benefit of local communities where industrial investments of national importance were implemented. They involved 30 municipalities. C oncerning the PIL, it was to be the basis for the creation of a decentralized state industry. Its purpose was to alleviate the negative effects of industrialization process undertaken by public enterprises in terms of job creation, implementation of local resources in order to meet local needs and decentralization of development. In fact, the period from 1967 to 1977 was dominated by a sectoral approach and state (proactive) economic development of Algeria; it took until the 1980s for the implementation o f a territorial approach. Indeed, the first law on spatial planning was enacted in 1987, completed in 2001. The latter was to meet the need to locate the investment at national, regional and local levels hence the creation of the SNAT (National Scheme of T erritory Development), SRAT (Regional Scheme of Territory Development) and PAW (Territory Development Plans of the “Wilayas”). SNAT locates the main intellectual, economic, transport and communication infrastructures. Concerning the Regional Scheme on Ter ritory Development, 9 regions have been located by the law of year 2001 : NORTH - CENTRAL, NORTH - EAST, NORTH – WEST, CENTRAL HIGHLANDS,